Ask Question
23 June, 21:42

On January 1, year 9 SaniTruck, Inc. leases two specialized materials cleanup trucks with a fair value of $79,205 from TruxCo., a financing intermediary, for a lease term of 7 years. TruxCo. includes an ongoing maintenance contract, charged at $3,000 per year, as part of the lease payments of $20,000 per year, payable on January 1 each year starting in year 9. Also included in the payments is legally required hazard insurance of $1,500 per year. Assuming that SaniTruck wishes to minimize the amount of lease payable recorded, at what amount should SaniTruck initially record a right-of-use asset at the beginning of the lease

0
Answers (1)
  1. 23 June, 23:35
    0
    The $86,870 is correct answer.

    Explanation:

    Annual payments for finance lease = 20000-3000 = $17000

    Annual payments 17000

    X Present value factor of annuity due (12%) 5.11

    Right - of-use asset = 17000 * 5.11 = 86870

    $86,870 is correct
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “On January 1, year 9 SaniTruck, Inc. leases two specialized materials cleanup trucks with a fair value of $79,205 from TruxCo., a financing ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers